Crown Ltd sells a single product with full capacity of 80,000 units per month. The selling price per unit
is $62 and is currently operating at 60% capacity. The fixed costs of the Company amount to
$500,000 per month and its Variable and Semi-Variable Costs are given below:
Variable costs:
Material $21 per unit
Labour $17 per unit
Overheads $ 7 per unit
Semi Variable costs:
At production volume of 60,000 units $200,000 per month
At production volume of 100,000 units $280,000 per month
Required:
(a) Calculate the total variable cost per unit.
(b) Calculate the total fixed cost per month.
(c) Calculate the break-even point in sales (units).
(d) Calculate the current margin of safety percentage.
(e) Calculate the minimum sales in units to earn a profit of $400,000 per month.
(f) Prepare flexible budget at 70%, 80%, 90% and 100% of capacity.
(g) Briefly discuss the advantages of a costing system in a manufacturing company.
(ALL WORKINGS REQUIRED)
